10 things to know about crowdfunding

Give it the time it deserves.

It’s far better to start early and allow yourself some time to rectify any slip-ups along the way than to put out a half-baked campaign that also proves to be an incredibly stressful experience. We advise working backwards, starting from the money in the bank. Typically, if a business needs cash in 4-6 months time then you need to start working on a crowdfund now.

Often the biggest pitfall is underestimating how long it can take to secure lead investment and warm up the crowd (anywhere from 4 weeks to 4 months). Not only that, but once the round is closed you have to factor in the time it takes to complete the legal process and receive the money in your bank (minimum 3 weeks from the time your crowdfund closes).

Build a strong investment proposition and a story.

Contrary to popular belief, if you build it they will not come…enticing investors and giving them a reason to invest is key. Never misjudge the crowdfunding or retail investor, often they can be just as savvy as traditional angels or VCs.

A good story is the best way to catch your investor’s interest. Make sure to clearly articulate your business, your story, why you’re raising money and crucially, the return that’s in it for them.

Invest in your assets.

With your investment assets out there for the world to see, it’s important to impress. This means investing in your brand and visual presentation of your investment deck and any supporting content.

Your video is equally important as most people will watch this before downloading the documents or reading the pitch text. Some will even invest off the back of your video alone. It’s worth investing time and money into these assets as they are securing hundreds of thousands if not millions in investment for you to grow your business.

Prepare Q&A and updates in advance.

Preparation is key. During a crowdfund, the same few questions are asked time and time again. Having a set of answers prepared is imperative especially in times where an online debate could get particularly heated. We also recommend you prepare a minimum of 10 updates in advance to ensure once live to the public, momentum is maintained on the platform.

Warm up your crowd.

Consider the 3 weeks before you go live as the warm up act to your main crowdfunding event. Just like at a concert, warming up the crowd can be make or break. Answering any questions, sending updates and priming the audience for investment is far more effective than simply sending an email and asking for money. Let your community know your fundraise is coming soon, build momentum and nurture your audience so that they are ready to invest when you go live.

Secure enough lead investment.

This area is often overlooked when preparing for a crowdfund. We always recommend you go to a crowdfunding platform as ‘fully funded’ as possible and we work to raise much as 80% of the minimum target ahead of going live on the platform. You can read more about how much money you need to raise before you crowdfund here.

Maintain momentum and growth.

This is one of the biggest pitfalls we see business owners falling into when raising investment – they spend so much time focusing on investors that they forget to grow their business. This means when it comes to updating investors with traction, they don’t have any key growth stats to show.

Fundraising can be a full time job, but it’s important that you balance out the role of fundraising and the task of growing your business. If this means outsourcing some of the heavy-lifting of fundraising so that you can focus on sales, customer retention, team growth or product development and ultimately driving the business forward, it’s a price worth paying.

See all about how to project manage your fundraise here.

Don’t assume it will be easy!

Unfortunately there is no yellow-brick-road to funding. It requires effort and perseverance. That being said, there are always ways to make your fundraising journey easier. Namely working with people who have experience in the sector and have developed the specific skills it takes to raise funds.

Leave no stone unturned.

Take a “no stone left unturned approach” to raising investment. From reaching out to investors, to updating customers on progress and hosting investor events – you have to put your foot on the gas for the full duration of the raise to give yourself the best chance of success.

This applies to both traditional fundraising and crowdfunding.

Keep your investors engaged post-fundraise.

Once you’ve made it through to closing a round of crowdfunding, it can be tempting to go back to business as usual with your new investment in the bank. However, be careful not to forget the people who made it possible – your new investors. This is especially apt if you have made a promise to keep in touch with them.

Think of the future and how much easier it will be to secure your next raise if you continue to nurture and develop the relationships you built during the first one… As best-practice, we advise updating investors at least once a quarter and even better once a month. High level information on sales, growth, new hires, product launches and key metrics are welcomed by investors, as are requests for help.

Your new investment community are now your best supporters and brand advocates – make the most of them and remember that you never know who might be able to help you as you all work together to grow the business.